Answer:
a) $ 495
b) $ 530
c) $ 30
d) $ 70
Explanation:
Given:
Stock price = $ 495
Strike prize = $ 530
a) The maximum possible price of a call option on Amazon is the stock price,
thus, the answer is $ 495
b) the maximum possible price of a put option on Amazon is the strike prize, thus, the answer is $ 530
c) given:
strike price = $ 465
now,
Minimum possible value of call option is given as :
⇒ Stock price- strike price
on substituting the values, we get
⇒ $ 495 - $ 465
or
⇒ $ 30
thus,
answer is $ 30
d) Given:
strike price = $ 565
Minimum possible value of an american put option on amazon stock is calculated as:
⇒ Strike price- stock price
on substituting the values, we get
⇒ $ 565 - $ 495
or
= $ 70
hence, the answer is $ 70
<u>Complete question:</u>
Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock as an investment in trading securities for $13,200. During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Fairbanks's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment
<u>Solution:</u>
Given,
Total shares = 400
Trading securities = $13,200
Cash dividend = $3.25 per share
Sales price of stock = $34.50 per share
Note: The image attached shows the journal entries of all the transactions.
Dividend revenue is
Fair value adjustment is
The above values are entered in the journal transaction.
Answer:
Wednesday, June 21st
Explanation:
In this scenario, since the customer redeemed the shares on Wednesday, June 14th then he must be paid before Wednesday, June 21st. This is 7 days after the redemption. According to section 22 article (e) of the Investment Company Act of 1940, all companies are prevented from postponing the date of payment for more than seven days as stated below.
(e) No registered investment company shall suspend the right
of redemption, or postpone the date of payment or satisfaction upon
redemption of any redeemable security in accordance with its terms
for more than seven days after the tender of such security to the
company or its agent designated for that purpose for redemption
Answer:
The U.S. economic system of free enterprise operates according to five main principles: the freedom to choose our businesses, the right to private property, the profit motive, competition, and consumer sovereignty. ... In the U.S. economic system, people's right to buy and sell private property is guaranteed by law.
Answer:
Roth IRAs
Explanation:
A Roth IRA is an individual retirement savings account tax-free withdrawals in retirement. The money that one saves in an IRA account is not subject to any taxation at the time of withdrawal if all conditions are met. A Roth IRA account allows one to pay for taxes now on small amounts and avoid paying taxes on huge amounts upon retirements.
Oscar should research a Roth IRA account and consider it for retirement savings. The account will allow him to save for many years and not pay taxes on the savings gains. The savings on the Roth IRA can be passed to beneficiaries and be withdrawn tax-free.